WEBVTT - Market Turmoil Continues, Inflation Debate Heats Up 0:00:01.760 --> 0:00:04.400 This is Bloomberg Business Week. I'm Carole Masser and I'm 0:00:04.440 --> 0:00:07.240 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.280 --> 0:00:09.800 you the latest news from the world to business and finance, 0:00:09.800 --> 0:00:13.640 plus technology, politics, economics, all parnessing the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:19.960 analyst in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.200 Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.360 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:31.520 YouTube search Bloomberg Global News. Let's set your business week 0:00:31.520 --> 0:00:35.040 agenda on, folks. Could be another interesting week. It's already 0:00:35.080 --> 0:00:36.839 a downward tone when it comes to the trade. So 0:00:36.920 --> 0:00:39.120 let's talk about it with Creedy Gupta, anchor and markets 0:00:39.120 --> 0:00:42.239 correspondent at Bloomberg. She is in our Interactive broker studio 0:00:42.280 --> 0:00:45.960 here at Bloomberg Headquarters. Juda Martin Adams, chief equity strategist 0:00:45.840 --> 0:00:48.519 of Bloomberg Intelligence. I've been going through her research. She 0:00:48.680 --> 0:00:50.240 is on the phone in New Jersey. We're going to 0:00:50.320 --> 0:00:52.760 get to her in just a second. Quick though, Creedy, 0:00:52.840 --> 0:00:54.760 let's talk about the trade today because it did seem 0:00:54.800 --> 0:00:58.000 like tech tried to rally earlier on. It did attempt 0:00:58.320 --> 0:01:01.840 um big emphasis on the word attempt um, but but 0:01:01.880 --> 0:01:03.600 it's still you are seeing some outperformance here. Take a 0:01:03.600 --> 0:01:05.640 look at this, the NASTAC down four tenths of one percent. 0:01:05.920 --> 0:01:08.800 Compare that to what you're seeing the SMP broadly, which 0:01:08.840 --> 0:01:11.040 was down about one percent at the session load. So 0:01:11.160 --> 0:01:13.720 you do see an attempt here. What's interesting to me, 0:01:13.760 --> 0:01:15.920 and I think we're pretty much just off session load, 0:01:16.280 --> 0:01:18.080 so we are, But I think what's crucial about the 0:01:18.080 --> 0:01:21.479 tech outperformance or relative outperformance I should say, is take 0:01:21.520 --> 0:01:23.320 a little at what's happening in the bond market. This 0:01:23.400 --> 0:01:26.760 kind of rate sensitivity, this currency sensitivity. We're so used 0:01:26.800 --> 0:01:29.679 to hitting the tech space. You're not seeing that today. 0:01:29.680 --> 0:01:32.679 In fact, the two year yield um came and you 0:01:32.720 --> 0:01:35.920 had an auction this morning, nobody or this afternoon, sorry, 0:01:36.120 --> 0:01:38.360 nobody wanted to hop into this trade. In fact, it 0:01:38.480 --> 0:01:41.640 tailed and the tenure yield got a lot more volatility. 0:01:41.680 --> 0:01:44.640 So twenty basis point move on the ten yure yield 0:01:44.680 --> 0:01:47.640 and we have yield still higher, the dollar gets even stronger. 0:01:47.760 --> 0:01:51.200 That technically should create a feedback loop into stocks broadly, 0:01:51.240 --> 0:01:52.920 and I think that's what you're seeing here, and that 0:01:52.960 --> 0:01:56.240 doesn't even take into account what's happening across the Atlantic. Yeah, 0:01:56.280 --> 0:01:58.680 I feel like the UK was just you tuned in 0:01:58.720 --> 0:02:00.680 this morning, you read the most read and so much 0:02:00.680 --> 0:02:02.520 of it had to do about the UK. Just quickly, 0:02:02.520 --> 0:02:04.040 what do we need to know about the UK in 0:02:04.160 --> 0:02:06.080 thirty seconds? Well, you need to know is that this 0:02:06.160 --> 0:02:08.680 is the poster or child story for monetary policy and 0:02:08.680 --> 0:02:11.120 fiscal policy. Butting heads is something that I think serves 0:02:11.120 --> 0:02:13.320 as a really big lesson for the United States as 0:02:13.360 --> 0:02:15.680 the federal Reserve tries to hike. Do you want the 0:02:15.720 --> 0:02:18.880 likes of the Biden administration and other state authorities as well, 0:02:19.080 --> 0:02:21.040 trying to give more stimulus in the face of a 0:02:21.080 --> 0:02:24.520 recession in that contradiction that the UK is proving does 0:02:24.560 --> 0:02:26.520 not work. It's tough tim right for so many people 0:02:26.520 --> 0:02:29.480 where this is they're struggling with higher prices and so 0:02:29.720 --> 0:02:31.639 we gonna talk more though about the trade. Yeah, So 0:02:31.680 --> 0:02:34.520 the question is where does one look for return when 0:02:34.560 --> 0:02:37.240 it comes to equities. Gina Martin Adams, chief equity strategist 0:02:37.280 --> 0:02:39.399 for Bloomberg Intelligence. Do you know last week we talked 0:02:39.400 --> 0:02:42.400 about small caps. This week we're talking about hy duration 0:02:42.440 --> 0:02:44.400 and megacap stocks. You and the team have a new 0:02:44.440 --> 0:02:47.200 noe doubt. But it's not essentially saying that they're standing 0:02:47.200 --> 0:02:48.520 out in a good way. It's in a bad way. 0:02:48.560 --> 0:02:51.200 What's going on? Yeah, So when we look at the 0:02:51.240 --> 0:02:55.680 distribution evaluations and five DRED, a lot of great value 0:02:55.720 --> 0:02:58.040 emerged over the course of the sell off in September. 0:02:58.120 --> 0:03:00.799 We're now looking at about seventy stucks the index trading 0:03:00.840 --> 0:03:05.200 below their pre pandemic norm in terms of valuation ratios. 0:03:05.440 --> 0:03:09.600 The equal weighted index is also trading back to its 0:03:09.639 --> 0:03:13.720 pandemic lows in terms of a forward multiple. So very 0:03:13.760 --> 0:03:16.360 clearly opportunities are emerging in the S and P. The 0:03:16.440 --> 0:03:20.040 problem is that those mega cap stocks are still incredibly inflated. 0:03:20.520 --> 0:03:23.200 Their premium is to the rest of the index and 0:03:23.440 --> 0:03:27.679 their hyduration long duration stocks. So that would suggest that 0:03:27.760 --> 0:03:29.640 if interest rates are going to keep rising, they're going 0:03:29.680 --> 0:03:32.600 to continue to have to reprice back to more normalized 0:03:32.680 --> 0:03:36.440 valuation levels consistent with those higher interest rates, and that 0:03:36.480 --> 0:03:38.920 could remain a source of tension in the index. So wait, 0:03:39.000 --> 0:03:40.720 let me just make sure I understand that. So Jinna, 0:03:40.760 --> 0:03:44.760 you said that various measures in terms of stocks multiples, 0:03:45.120 --> 0:03:49.520 it's kind of different variations. Were below pre pandemic valuations, yep, 0:03:49.680 --> 0:03:53.360 So the index actually now trades below its pre pandemic 0:03:53.360 --> 0:03:57.400 average multiple. So we're looking at before the pandemic, before 0:03:57.440 --> 0:04:01.680 the valuation and massive valuation expansion five year average multiples 0:04:01.680 --> 0:04:07.040 pre pandemic, so that level and SMPS five hundred stocks 0:04:07.040 --> 0:04:10.200 are now trading at discount that average. But it's not 0:04:10.360 --> 0:04:13.440 enough what you're saying. They still need to reprice lower. Yeah, 0:04:13.480 --> 0:04:15.960 So what's not enough is the fact so that other 0:04:16.000 --> 0:04:19.120 thirty percent has a lot of the biggest stocks in 0:04:19.160 --> 0:04:21.920 the SMP five hundreds, So the market capitulating the index 0:04:22.000 --> 0:04:24.920 is getting in trouble here where the biggest stocks are 0:04:24.960 --> 0:04:29.039 still premium priced. There's a lot of concentration in those 0:04:29.080 --> 0:04:32.720 biggest stocks. Most investors own them and are overweight them. 0:04:32.880 --> 0:04:35.800 The result of that is they're hanging onto these stocks 0:04:35.839 --> 0:04:38.240 that it should be repricing with the rest of the index. 0:04:38.760 --> 0:04:41.520 So that creates a lot of turmoil for the index 0:04:41.560 --> 0:04:44.320 at large. You know, if you're still hanging onto stocks 0:04:44.320 --> 0:04:47.400 with a duration that is bigger or longer than the 0:04:47.440 --> 0:04:49.719 rest of the SMP five hundred In an environment where 0:04:49.760 --> 0:04:53.840 interest rates are going higher, you're probably mispositioned and the 0:04:53.880 --> 0:04:56.360 index at large is still at risk of correction. Did 0:04:56.400 --> 0:04:58.760 you know, very briefly, what about when it comes to 0:04:59.040 --> 0:05:00.680 when we start to hear from these companies and then 0:05:00.720 --> 0:05:03.080 we see do we see in some sort of other reset, because, 0:05:03.080 --> 0:05:05.440 after all, for better for worse, this quarter is over 0:05:05.480 --> 0:05:07.800 this week. Yeah, I think that we do want to 0:05:07.800 --> 0:05:10.559 look forward into October's earning season. It's a bit early 0:05:10.640 --> 0:05:13.000 to do so yet, as we're still trading clearly on 0:05:13.080 --> 0:05:15.720 macro um. You know, the interest rates are the biggest 0:05:15.800 --> 0:05:18.480 driver of equities still, with utilities and real estate stocks 0:05:18.480 --> 0:05:21.440 trading off today by the most among sectors in the 0:05:21.560 --> 0:05:24.839 SMP five hundred. Nonetheless, I do think we want to 0:05:24.839 --> 0:05:27.480 look forward to the earning season and start to sort 0:05:27.520 --> 0:05:31.760 of handicap the prospects for earnings to come in probably 0:05:31.800 --> 0:05:35.120 a little bit better than anticipated, given the insulationary backdrop 0:05:35.520 --> 0:05:39.440 and the relatively steady economic indications that we're getting. As 0:05:39.520 --> 0:05:41.800 much as the market is in turmoil with this interest 0:05:41.880 --> 0:05:47.280 rate reset, the economy has been relatively resilient, suspiciously resilient, 0:05:47.400 --> 0:05:50.960 and inflation is still pricing power is still somewhat intact 0:05:51.480 --> 0:05:53.800 for many of these companies, so earning season could be 0:05:53.839 --> 0:05:56.200 pretty meaningful. Got to be quick twenty seconds. I gotta 0:05:56.240 --> 0:05:57.880 ask you. We're talking about there's a story in the 0:05:57.920 --> 0:06:01.360 Blueberg about investors sitting on five billion dollars worth of cash, 0:06:01.839 --> 0:06:03.600 you know, ready to put to work. Does that factor 0:06:03.760 --> 0:06:05.400 in it all in terms of how you think about 0:06:05.400 --> 0:06:08.720 the outlook in really quickly, Gina, yeah, not tons. I mean, 0:06:08.839 --> 0:06:10.719 you know, there's always a decent amount of cash on 0:06:10.720 --> 0:06:12.640 the sidelines, and frankly, for the first time in a 0:06:12.640 --> 0:06:14.599 long time, you're gonna get paid to hold some cash. 0:06:14.640 --> 0:06:17.240 The competitive landscape is very different today than it was 0:06:17.279 --> 0:06:19.320 in yours pass the c D back in fashion. Who 0:06:19.360 --> 0:06:21.640 would have thought, alright, guys, we get it wrong. Thank 0:06:21.680 --> 0:06:24.800 you so much. Critykopta, anchor and markets correspondent at Bloomberg, 0:06:24.800 --> 0:06:26.880 along with Gina Martin Adams of our Bloomberg intellent. That's 0:06:26.880 --> 0:06:29.400 certificate of deposit, not compact disc By the way, we'll 0:06:29.440 --> 0:06:31.400 walk around our global cities and you're likely to see 0:06:31.400 --> 0:06:33.920 a common denominator among them. It's all in a story 0:06:33.920 --> 0:06:36.440 that is among our most read today on the Bloomberg 0:06:36.560 --> 0:06:39.320 terminal It's also happens to be the Bloomberg Big Take, 0:06:39.360 --> 0:06:42.159 and it's about New York City's empty offices and their 0:06:42.279 --> 0:06:45.600 reveal of a global property dilemma. The story written by 0:06:45.839 --> 0:06:49.040 Natalie Wong, John Getlsen and Noah Boo Hire. Natalie Wong 0:06:49.279 --> 0:06:52.000 joins us now she's US commercial real estate reporter for 0:06:52.040 --> 0:06:54.320 Bloomberg News. It is Today's a big Take. Check it 0:06:54.360 --> 0:06:56.880 out it Bloomberg dot Com and of course, and I 0:06:56.960 --> 0:06:59.880 big take on the Bloomberg terminal as well. Natalie, good 0:06:59.880 --> 0:07:03.000 to have you with us this afternoon. Laid out for us. 0:07:03.040 --> 0:07:05.800 If you take a stroll down Third Avenue in New 0:07:05.839 --> 0:07:08.120 York City, what do you see? Thanks for having me. 0:07:08.160 --> 0:07:09.960 So we go down Third Avenue. First of all, we 0:07:10.000 --> 0:07:12.680 see a lot of empty retail storefronts, indicating that a 0:07:12.720 --> 0:07:14.800 lot of retailers are not moving in because there's not 0:07:14.920 --> 0:07:17.320 enough workers on that corridor. And then you also see 0:07:17.360 --> 0:07:20.440 a lot of nineteen fifties to nineteen eighties office buildings 0:07:20.520 --> 0:07:23.600 that don't quite compare to the new one Vanderbilt by 0:07:23.640 --> 0:07:26.480 Grand Central or the Hudson Yard skyscraper that we see 0:07:26.480 --> 0:07:28.360 across the rest of the city. Souch is something that's 0:07:28.480 --> 0:07:31.800 nineteen fifties to nineteen eighties look like, is it just 0:07:31.840 --> 0:07:34.280 a fewer windows. It's not all glass that sort of thing. 0:07:34.440 --> 0:07:37.760 It's more of those glass buildings with punched out windows 0:07:37.760 --> 0:07:41.080 that don't necessarily have a lot of outdoor spaces. You know, 0:07:41.120 --> 0:07:42.920 if you go towards Hudson Yard you see some building 0:07:42.920 --> 0:07:46.040 the spirals going up. They have cast skating terraces around 0:07:46.040 --> 0:07:48.840 the building, but these ones not a lot of outdoor spaces. 0:07:48.920 --> 0:07:51.120 Looks a little bit outdated when you walk into the lobby, 0:07:51.240 --> 0:07:53.520 not a lot of amenities. So how much of it 0:07:53.600 --> 0:07:56.520 is like in the realm of all those reality shows, 0:07:56.520 --> 0:07:58.600 it's done for a makeover for all these office buildings. 0:07:58.600 --> 0:08:01.040 How much, though, is just a pandemic world and not 0:08:01.080 --> 0:08:04.440 everybody's going back to work. Um, It's it's both in 0:08:04.480 --> 0:08:06.960 the sense that right now in New York City we 0:08:07.000 --> 0:08:09.120 have less than fifty of workers that have returned back 0:08:09.160 --> 0:08:12.080 to work. Especially for Third Avenue buildings. A lot of 0:08:12.120 --> 0:08:14.440 tenants have rolled over releases and are not renewing them, 0:08:14.440 --> 0:08:16.840 so there's a lot of vacant spaces left. And then 0:08:16.880 --> 0:08:19.880 it's really costly for landlords to put in hundreds of 0:08:19.880 --> 0:08:22.880 millions of dollars to renovate an entire building. It's extremely 0:08:22.880 --> 0:08:25.040 hard to do that. People don't necessarily have the funds, 0:08:25.400 --> 0:08:27.720 and then on top of that, lenders may not necessarily 0:08:27.760 --> 0:08:30.480 want to help finance that either. At this point you 0:08:30.520 --> 0:08:33.240 mentioned financing. It's a big part of this story with 0:08:33.520 --> 0:08:36.200 the loans coming due in the coming years. How does 0:08:36.240 --> 0:08:38.520 that look for the office buildings that you took a 0:08:38.520 --> 0:08:41.199 look at for this pace? Just in general, a lot 0:08:41.200 --> 0:08:44.840 of lenders are really not keen on lending on any 0:08:44.880 --> 0:08:47.720 office buildings, some even for Class A let alone Class 0:08:47.760 --> 0:08:50.640 B offices that are not getting any traction at all 0:08:50.720 --> 0:08:53.960 from tenants. Where you know, landlords are struggling with maintaining 0:08:54.040 --> 0:08:56.080 costs because they have a dwindling rent rules. So it's 0:08:56.120 --> 0:08:58.600 not looking that promising for a lot of these landlords. 0:08:58.600 --> 0:09:00.560 How much is to also build at Like in a 0:09:00.600 --> 0:09:02.640 city like New York City, I feel like we've seen 0:09:02.760 --> 0:09:04.640 a lot of building continue, especially when it comes to 0:09:04.640 --> 0:09:07.440 commercial space, and there's just man, if I'm looking for space, 0:09:07.600 --> 0:09:10.600 I've got options and maybe nicer options and options that 0:09:10.640 --> 0:09:14.160 make more sense for how people are wanting to work. 0:09:14.280 --> 0:09:17.840 It's extremely competitive, I guess for landlords because you're right. 0:09:17.880 --> 0:09:20.520 There are a lot of new skyscrapers popping up. There's 0:09:20.559 --> 0:09:22.680 a lot of space that tenants have left behind, like 0:09:22.760 --> 0:09:26.160 really nice sublet space across even Hutson Yards, newly built 0:09:26.160 --> 0:09:30.080 out offices that these tenants aren't taking. And so people can, 0:09:30.400 --> 0:09:32.320 you know, have a look around Park Avenue fifth or 0:09:32.320 --> 0:09:34.400 Medicine for what they want. We're talking New York in 0:09:34.400 --> 0:09:36.240 a big way, but we do say this story's global, 0:09:36.320 --> 0:09:37.920 so broaden out for us in terms of what we're 0:09:37.920 --> 0:09:40.000 seeing around the globe. I mean, this is an issue 0:09:40.000 --> 0:09:42.680 happening across every major global city around the world. In 0:09:42.720 --> 0:09:45.560 our story, you can see vacancy rates have swored from 0:09:46.440 --> 0:09:49.480 across Toronto, Frankfurt, Tokyo, and Hong Kong. It's not an 0:09:49.520 --> 0:09:52.240 issue that's just common to New York. Okay, Natalie and 0:09:52.280 --> 0:09:54.720 I asked the question that everyone has been asking for 0:09:54.760 --> 0:09:57.680 two years. We have a housing crisis here in the city. 0:09:58.440 --> 0:10:03.800 Converting these office build things into homes easier said than done. 0:10:03.840 --> 0:10:07.240 I mean, the windows don't open, communal bathrooms on every 0:10:07.240 --> 0:10:09.679 floor like it's a tall task. Is it something that 0:10:09.720 --> 0:10:12.760 is even being considered. It's definitely being considered. People have 0:10:12.800 --> 0:10:14.960 been talking about it NonStop. But the problem right now 0:10:15.040 --> 0:10:18.240 is there's no legislation or tax incentives that makes it 0:10:18.280 --> 0:10:21.520 doable for these landlords. It's an extremely costly proposition. A 0:10:21.559 --> 0:10:23.319 lot of the buildings that could have been converted that 0:10:23.360 --> 0:10:26.160 you've seen downtown happen converted, and in Midtown you're full 0:10:26.160 --> 0:10:28.560 of these big block buildings that don't have a lot 0:10:28.600 --> 0:10:30.920 of sunlighter air in the core. And it's just really 0:10:30.960 --> 0:10:34.120 hard to make that proposition without having any tacks or 0:10:34.120 --> 0:10:37.679 financial incentives. So enter private public partnerships. Is that's what's needed. 0:10:37.679 --> 0:10:39.800 And I think about you mentioned you guys mentioned in 0:10:39.840 --> 0:10:42.400 your story about what happened post none eleven in terms 0:10:42.400 --> 0:10:45.080 of downtown Manhattan, and we needed to see those private 0:10:45.080 --> 0:10:48.400 public partnerships. Right. We saw thousands of apartments spring up 0:10:48.720 --> 0:10:51.240 um in place of those empty offices, and that's definitely 0:10:51.280 --> 0:10:54.439 something that people are talking because nobody wanted to work downtown, right, 0:10:54.520 --> 0:10:57.240 Nobody wanted to work downtown after nine eleven. Yeah, and 0:10:57.679 --> 0:11:00.120 it really wasn't a livable area as well. And now 0:11:00.200 --> 0:11:03.320 you go down there, it's seven neighborhood. One are the 0:11:03.320 --> 0:11:05.440 things I think about Tim during the pandemic, we all 0:11:05.520 --> 0:11:08.560 talked about, especially as as people obviously and had to 0:11:08.640 --> 0:11:11.679 flee their offices and then weren't coming back. Are we 0:11:11.720 --> 0:11:14.760 going to see some kind of commercial market crisis as 0:11:14.760 --> 0:11:16.720 a result. I don't know that it's yet played out 0:11:16.760 --> 0:11:19.000 in the financial markets, right, we haven't really seen it, 0:11:19.040 --> 0:11:21.760 but I feel like these conversations, how could it not? 0:11:22.200 --> 0:11:24.000 People have been talking about it for more than two 0:11:24.040 --> 0:11:26.280 years now, you know, with like loans coming to how 0:11:26.360 --> 0:11:30.240 much longer can can lenders extend the timeline for people? 0:11:30.600 --> 0:11:34.600 It's unclear one that's gonna unfold, But definitely there's more 0:11:34.640 --> 0:11:36.720 to come, you know, in terms of the mountain the 0:11:36.760 --> 0:11:40.160 market balancing out. Okay, thirty seconds. I'm wondering, Natalie, if 0:11:40.640 --> 0:11:42.960 if the economy does start to turn for the worst 0:11:43.000 --> 0:11:44.840 and we do see a labor market that it's a 0:11:44.840 --> 0:11:47.360 little softer, does it change with more people being asked 0:11:47.400 --> 0:11:50.560 to come into work. I mean, I think we've definitely 0:11:50.600 --> 0:11:52.839 already seen an increase in people coming back to work, 0:11:52.920 --> 0:11:54.840 But I don't know necessarily that you know, people being 0:11:54.880 --> 0:11:57.400 worried about being fired is going to suddenly turn around 0:11:57.400 --> 0:11:59.920 the entire office market. There's just too much office space 0:12:00.000 --> 0:12:02.200 and there's not enough demand alright. Hashtag new normal. J 0:12:02.280 --> 0:12:04.280 Powell says that I'm just leaning into it in a 0:12:04.280 --> 0:12:07.400 big way, right, so many different things. Um, what a 0:12:07.440 --> 0:12:10.280 great piece of reporting by you and our team. Natalie Wong, 0:12:10.360 --> 0:12:13.079 she's US commercial real estate reporter at Bloomberg News, joining 0:12:13.160 --> 0:12:15.240 us in our Interactive broker studio. Also check this one 0:12:15.240 --> 0:12:17.400 out online because it is very interactive and you can 0:12:17.440 --> 0:12:19.920 scroll through it geographically. It's very cool. All right, you 0:12:19.960 --> 0:12:22.680 are listening watching Bloomberg Business Week. Follow us here, which 0:12:22.720 --> 0:12:25.319 means a new docut of Supreme Court cases to be considered, 0:12:25.440 --> 0:12:28.160 everything from the right to vote, firmative action, gay rights, 0:12:28.160 --> 0:12:31.160 and even one involving Andy Warhol and prints so of 0:12:31.200 --> 0:12:33.640 a variety of topics. Joel Webber is the editor of 0:12:33.640 --> 0:12:35.559 Bloomberg Business Week. He's with us right now in the 0:12:35.559 --> 0:12:38.920 Bloomberg Interactive Brokers Studio. Greg Store is Supreme Court reporter 0:12:39.280 --> 0:12:42.679 for Bloomberg News. Check out Gregg story. It's available on 0:12:42.679 --> 0:12:45.240 the Bloomberg terminal and of course at Bloomberg dot com. 0:12:45.280 --> 0:12:47.040 Slash of business Week. It's all about the U S 0:12:47.080 --> 0:12:50.760 bracing for a new round of devices Supreme Court clashes. 0:12:51.240 --> 0:12:54.720 Joel Uh, we know the makeup of the court hasn't changed. 0:12:54.720 --> 0:12:58.959 Because Katagi Brown Jackson is replacing Stephen Bryer, So it's 0:12:58.960 --> 0:13:01.080 still firmly in a concern of it. Of camp any 0:13:01.120 --> 0:13:05.280 surprises ahead, Well, you're gonna see more of the same. 0:13:05.360 --> 0:13:08.240 So maybe that's a surprise depending on how you've been, 0:13:08.840 --> 0:13:10.800 how long you've been watching UM And and that was 0:13:10.840 --> 0:13:13.839 sort of what we uh we we we started talking 0:13:13.840 --> 0:13:16.720 to Greg about actually kind of like weeks or months 0:13:16.760 --> 0:13:20.360 ago now, because we saw the last term end and 0:13:20.520 --> 0:13:22.440 we knew that there was gonna be this next term, 0:13:22.440 --> 0:13:24.960 and we were like, you know, what's it gonna look 0:13:25.000 --> 0:13:28.880 like and what we and keep in mind how divisive 0:13:29.040 --> 0:13:32.320 last time was. Uh So what Greg came back with 0:13:32.480 --> 0:13:35.559 was basically like, boy, if you thought last time was divisive, 0:13:35.679 --> 0:13:38.280 like this time it's going to be more of the same. 0:13:38.280 --> 0:13:42.000 So so Greg tell us, um what you're somebody who 0:13:42.120 --> 0:13:45.920 who is all over Supreme Court coverage? We're gonna see 0:13:46.559 --> 0:13:51.080 sessions resume next Monday. What are you watching for? Well, 0:13:51.320 --> 0:13:53.240 as you said, more of the same, we're going to 0:13:53.440 --> 0:13:55.920 see the kind of divides At least we expect to 0:13:55.920 --> 0:13:58.560 see the kind of divides that we saw last term. 0:13:58.720 --> 0:14:01.440 There may not be a single day case case quite 0:14:01.440 --> 0:14:04.800 as big as the Job's case that overruled the constitutional 0:14:04.880 --> 0:14:08.240 right to abortion. But we're gonna have a huge college 0:14:08.240 --> 0:14:12.560 affirmative action fight coming up on October thirty one. There 0:14:12.600 --> 0:14:17.000 are a couple of very big voting cases involving partisan 0:14:17.080 --> 0:14:22.200 gerrymandering and so called racial gerrymandering. We've got cases involving 0:14:23.040 --> 0:14:25.840 gay rights and whether people have a business owners have 0:14:25.880 --> 0:14:29.600 a free speech right to uh to say I don't 0:14:29.600 --> 0:14:33.160 want to take part in the same sex wedding. All 0:14:33.200 --> 0:14:36.960 these things are the kind of cultural issues that you know, 0:14:37.040 --> 0:14:40.840 divide the country and divide the court increasingly in a 0:14:40.840 --> 0:14:46.800 conservative way to greg what's the what's the one that 0:14:47.000 --> 0:14:50.160 you think is going to be Probably, well, it's back 0:14:50.240 --> 0:14:54.520 up here, right like we've had this sort of court 0:14:54.600 --> 0:14:57.880 that was a little bit more balanced in decisions. What 0:14:58.000 --> 0:15:00.640 are the decisions, you know, the uses that you kind 0:15:00.640 --> 0:15:04.520 of just rattled up there where where where's the power? Imbalanced? 0:15:04.520 --> 0:15:07.920 Start to look like, well, you know, you look at 0:15:08.160 --> 0:15:12.280 the affirmative action case for example, that is actually two 0:15:12.280 --> 0:15:15.760 cases before the Supreme Court, one involving Harvard, one involving 0:15:15.800 --> 0:15:19.640 the University of North Carolina. And this case takes direct 0:15:20.080 --> 0:15:23.600 These appeals take direct aim at two thousand three Supreme 0:15:23.600 --> 0:15:27.280 Court decision that that reaffirmed that universities can use race 0:15:27.400 --> 0:15:31.239 as an admissions factor for the sake of enhancing diversity 0:15:31.320 --> 0:15:34.520 on campus. And that's something that the large majority of 0:15:34.560 --> 0:15:39.440 selective universities do. They say, if you overturn that, uh, 0:15:39.480 --> 0:15:42.120 it's going to have a devastating effect on their ability 0:15:42.160 --> 0:15:45.920 to make sure there's a significant number of black and 0:15:46.000 --> 0:15:51.440 Hispanic and Native American students on campus. Um. You know 0:15:51.600 --> 0:15:55.320 that that's a case where you can see this court's 0:15:55.400 --> 0:15:59.720 change of membership, the three Trump appointees who made the 0:15:59.760 --> 0:16:02.360 court more conservative. You can see that that that they're 0:16:02.480 --> 0:16:04.320 very likely going to make a difference. It's a case, 0:16:04.360 --> 0:16:07.080 actually we're Chief Justice with John Robberts, who we we 0:16:07.160 --> 0:16:09.120 know in some cases has not been willing to go 0:16:09.160 --> 0:16:12.280 as far as some of these conservative colleagues on this issue. 0:16:12.440 --> 0:16:15.320 He's kind of been in the vanguard saying, um, I 0:16:15.360 --> 0:16:18.560 believe in a color blind constitution. The constitution doesn't permit 0:16:18.800 --> 0:16:22.680 racial discrimination, and he has suggested he sees these race 0:16:22.720 --> 0:16:27.200 conscious admissions as racial discrimination. So, uh, you know, the 0:16:27.240 --> 0:16:30.800 Conservatives certainly go into that case with the upper hand. 0:16:31.640 --> 0:16:34.520 What's interesting there, though, is what we learned last time 0:16:34.560 --> 0:16:36.960 is that Roberts has maybe his own man on this court, 0:16:37.000 --> 0:16:40.240 and that you've got several justices to the to the 0:16:40.320 --> 0:16:43.040 right of him and several to the left. Uh. And 0:16:43.240 --> 0:16:46.080 and that also, you know, you have this line here that, um, 0:16:46.440 --> 0:16:49.200 the court faces at least the spectr of a legitimacy crisis, 0:16:49.200 --> 0:16:52.120 if not a full blown one. Talk about what that means, 0:16:52.280 --> 0:16:55.920 you know, the court going its own way here and 0:16:55.920 --> 0:17:00.320 and sort of America the American publics, uh, you know, 0:17:01.080 --> 0:17:04.760 reaction to that. Well, let's start with the American public's reaction. 0:17:04.840 --> 0:17:09.160 We've seen declining confidence in the courts, declining the Court's 0:17:09.200 --> 0:17:14.200 approval ratings, not surprisingly but noteworthy. Uh. That's especially with 0:17:14.200 --> 0:17:18.800 with Democrats. Overwhelmingly Democrats now say they disapprove of the 0:17:19.160 --> 0:17:23.160 Supreme Court. Um. And over the summer and a couple 0:17:23.160 --> 0:17:26.439 of different presentations, Justice Heelena kay In one of the 0:17:26.480 --> 0:17:31.680 liberal justices, without actually naming names and talking about particular cases, 0:17:31.720 --> 0:17:34.720 but she talked about what in her mind creates a 0:17:34.840 --> 0:17:39.119 legitimate legitimacy problem for a court. And she talked about, um, 0:17:39.680 --> 0:17:42.000 you know, if you have the same issue being decided 0:17:42.359 --> 0:17:45.760 a different way because the courts membership has changed, and 0:17:46.000 --> 0:17:49.080 one could certainly think about cases like the abortion cases 0:17:49.160 --> 0:17:52.520 as fitting into that category. Um. And so when you 0:17:52.600 --> 0:17:56.159 have a justice on the court, uh, you know, at 0:17:56.200 --> 0:17:59.959 least raising that that specter um. You know, it's certainly 0:18:00.040 --> 0:18:02.639 something for for you know, all of us to to 0:18:02.720 --> 0:18:05.520 pay attention to Creig. I want to dive into the 0:18:05.560 --> 0:18:08.760 elections that a little bit and how elections could shift 0:18:08.920 --> 0:18:12.040 under the Supreme Court. What what could they do specifically 0:18:12.200 --> 0:18:15.240 to make it so state supreme courts have a different 0:18:15.240 --> 0:18:18.560 hand in elections. Yeah, So there are two big election cases, 0:18:18.600 --> 0:18:22.120 and the one involving state supreme courts has to do 0:18:22.600 --> 0:18:26.560 with a North North Carolina redistricting fight. And so let 0:18:26.560 --> 0:18:28.280 me just back up for a second. Remember a few 0:18:28.320 --> 0:18:31.680 years ago, the Supreme Court said, we, the Supreme Court 0:18:31.720 --> 0:18:35.320 interpreting the U. S. Constitution, don't have authority to say 0:18:35.359 --> 0:18:40.040 that voting districts are so partisan or unconstitutional. They said 0:18:40.080 --> 0:18:43.840 that sort of partisan jurymandering claim doesn't fly in federal court. 0:18:44.080 --> 0:18:46.720 But they left open the possibility that a state supreme 0:18:46.760 --> 0:18:50.680 court could say, hey, under our state constitution, uh, these 0:18:50.720 --> 0:18:54.000 districts you've drawn are unconstitutional. And that's what happened in 0:18:54.000 --> 0:18:56.879 this North Carolina case, and now the question at the 0:18:56.920 --> 0:18:59.240 Supreme Court, and it could be a really far reaching one, 0:18:59.800 --> 0:19:04.560 is whether the the US Constitution limits what what what 0:19:04.640 --> 0:19:07.080 a state Supreme Court can do. The U. S. Constitution, 0:19:07.119 --> 0:19:10.320 when it talks about drawing districts and setting voting rules 0:19:10.359 --> 0:19:13.840 for congressional elections, says that the power to do that 0:19:13.920 --> 0:19:17.919 lies with the state legislature. Uh. And so the question 0:19:17.960 --> 0:19:22.399 is whether the North Carolina Supreme Court kind of overstepped 0:19:22.400 --> 0:19:25.040 its bounds in doing something that only the North Carolina 0:19:25.119 --> 0:19:28.600 state legislature can do. And and this issue could apply 0:19:28.680 --> 0:19:33.760 in a whole variety of context, potentially including presidential elections. Well, 0:19:33.840 --> 0:19:36.760 it's it's pretty wild. And when you think about personality 0:19:36.840 --> 0:19:41.440 and politics and how that potentially is has definitely shaped 0:19:41.520 --> 0:19:43.840 our our new Supreme Court or our latest U. S. 0:19:43.840 --> 0:19:45.960 Supreme Court. Hey guys, we get around. Greg Store, thank 0:19:45.960 --> 0:19:48.280 you so much, Supreme Court reporter at Bloomberg News from 0:19:48.359 --> 0:19:50.280 d C. And of course our thanks as always to 0:19:50.320 --> 0:19:58.800 the editor of Bloomberg Business Week, Jill Webber, the journal. Now, 0:19:58.800 --> 0:20:03.760 but you let me drive, no, no, no, all right, please, 0:20:06.400 --> 0:20:14.800 I want to try. It's good question. This is the 0:20:15.000 --> 0:20:21.720 drive to the close. On Bloomberg Radio. You are listening 0:20:21.720 --> 0:20:24.040 to Bloomberg Business Week and it is just about ten 0:20:24.040 --> 0:20:26.879 minutes away from that closing Vell Carol Master along with 0:20:26.960 --> 0:20:29.440 Tim Stanovic, we've got the perfect guest to talk about 0:20:29.680 --> 0:20:31.840